When it comes to net lease investments, one of the first questions investors face is whether to choose a single-tenant (STNL) or a multi-tenant (MTNL) property. Both structures can deliver reliable income, but they differ in terms of risk, stability, and management requirements. Understanding these differences will help you determine which option best aligns with your investment strategy and long-term goals.
What Is a Single-Tenant NNN Property?
A single-tenant net lease property is leased to just one tenant, often a national brand such as Walgreens, Dollar General, or Panera Bread. Under a triple net (NNN) lease, the tenant typically covers property taxes, insurance, and maintenance, leaving the investor with predictable, passive income.
Advantages:
- Stable, predictable cash flow when backed by a strong corporate tenant.
- Minimal management responsibilities for investors.
- Leases typically span 10–20 years and include scheduled rent increases.
Risks:
- All-or-nothing income stream. If the tenant vacates, 100% of your rental income disappears.
- Tenant credit risk. With single-tenant NNN properties, your returns rise and fall with one tenant’s financial health.
What Is a Multi-Tenant NNN Property?
A multi-tenant net lease property is leased to multiple businesses, often in shopping centers or office complexes. Tenants share responsibility for expenses under NNN terms, but the income stream is diversified across several occupants.
Advantages:
- Diversified income. If one tenant leaves, others continue to generate rent.
- Potentially higher overall returns due to multiple tenants paying market rents.
- Attractive locations. These properties are often in high-traffic areas with strong consumer demand.
Risks:
- More active management. Even with NNN terms, coordinating multiple tenants requires greater oversight.
- Leasing risk. Vacant spaces may take time to fill, especially in a competitive market.
- Tenant mix challenges. Success in multi-tenant properties often comes down to one factor—the right combination of complementary businesses.
Which Is Right for Your Portfolio?
The choice between single-tenant and multi-tenant NNN depends on your investment goals, risk tolerance, and management preferences:
Choose Single-Tenant NNN if:
You want steady, hands-off income secured by a strong corporate tenant. This option is ideal for investors prioritizing low involvement and long-term stability.
Choose Multi-Tenant NNN if:
You want diversified income streams and are comfortable with a bit more complexity in exchange for potentially higher returns and reduced dependence on a single tenant.
Final Thoughts
Every NNN investment strategy is unique. Single-tenant deals deliver reliable stability, while multi-tenant opportunities open the door to diversification and long-term growth. A balanced portfolio might even include both, allowing you to capture the strengths of each approach.
Before making a decision, consider factors such as tenant creditworthiness, lease terms, location strength, and your own investment horizon. With careful planning, either option can play a valuable role in building long-term wealth through net lease real estate.